Image: r2hox; data.path Ryoji.Ikeda – 4

EDI has been for many years the work-horse for any sizable company that wants to efficiently conduct business with its trading partners (suppliers and customers).  But EDI has one annoying tendency: message failures; that is, a message (purchase order, invoice) that failed to reach its intended receiver.  No message, no PO, no invoice, no transaction, no sale, no cash.

EDI works a lot like the tasks that contestants have to perform on The Amazing Race: something has to be rendered in precisely the way prescribed, or contestants do not advance.  When the contestants fail, they do not know why, which is also generally the case with EDI failures – and an investigation of the failed message is required.

EDI messages have many segments that, arranged in a particular way, constitute the “map” for the message.  The segments are populated with data, such as customer number, product number, gross price, and net price.  Trading partners agree on a standard map for each type of transaction and therefore on the segments and the data structure within the map.  Any deviation from standard results in message failure.

These deviations stem from the every-day mundane workflow: a product number is changed on the sending or receiving end, data is entered incorrectly, new product master data isn’t uploaded into someone’s system, a suffix or prefix is added to a value in one of the segments, a trading partner changes part of the map and fails to communicate the change, or a required field is blank.  Adding to the complexity are increasing demands for more data on the EDI message itself, some of which, such as warranty information, is nearly impossible to integrate into an EDI map.

For the master data portion, data synchronization tools exist and are important in an EDI environment.  Methods to keep these records in sync range from emails to spreadsheet uploads to third party services.  It’s not exciting work, which is why it’s so easy to give it little attention.

There are at least three ways to align data between trading partners.  One is to employ electronic synchronization through standard EDI messages.  In this scenario, the systems used by your trading partners are immediately updated for changes in your master data.  Another is to use a third party data management service such as 1 World Sync, and another is to incorporate your data synchronization with your EDI services company.  SPS Commerce is one EDI services firm that has developed item data maintenance as part of its offerings, and it offers user portals to identify and display messaging errors and message tracking in human-readable formats.

I believe EDI is something that should be outsourced, and so for me incorporating data synchronization through an EDI services company is the best option.  The electronic and third-party data synchronization solutions also potentially leave out many data elements that are critical for uninterrupted EDI messaging, such as DUNs numbers, banking information, item cross-referencing, and special codes.

Having said that, nothing is foolproof.  Human mistakes can’t be avoided.  Until someone invents the next generation of e-commerce we are stuck with traditional EDI and its weaknesses; being aware of those weaknesses is the first step to overcoming them.

Image by Digital Strategy, CC license

Although EDI has been around for 20 years, lots of companies still process orders and invoices manually; that is, they receive a written, faxed, or e-mailed purchase order or invoice, then  type it into whatever software they have for tracking and fulfilling orders and paying suppliers.

If you  can’t or don’t want to get into EDI with your trading partners, there are at least two other options: buying software to image the paper documents and convert them to digital format for integration to your systems, or outsourcing the imaging and integration to a third party.

Let’s review the first option.  ReadSoft is one leading vendor offering document imaging.  The company states that it’s solutions “automate the processes of scanning, interpreting, and filing of invoice data,” and provide “seamless workflow integration with SAP, Oracle and over 50 ERP systems.”  The software enables three-way matching of invoice, purchase order, and contract.

My experience with ReadSoft is that it is a solid solution; although the expertise began with invoices the company also manages the purchase order side as well.  The companies that I know use ReadSoft have purchased it as an “on-premise” solution; that is, they have purchased the license for the software and installed it on a server within their organization.  It has a good rules-based engine for checking documents for certain attributes prior to integration with your main systems.

The second option is to outsource the receipt, capture, filtering, and integration to a 3rd party.  One vendor that does this is OmPrompt, a UK-based firm that is relatively small but boasts numerous marquee brand-name global companies as clients.  I also have experience with this company and indeed their solutions are solid and deliver as promised.

OmPrompt, in simple terms, works like this: your paper traffic is diverted to the company, you apply whatever business rules and filters to those documents, and OmPrompt then sends to your ERP system the proper digital files to complete the transactions.  OmPrompt handles business from around the globe, from the Middle East to China.  OmPrompt also processes EDI exchanges, and customer claims — a huge headache for many companies.

Which type of solution — on-premise or service — is better for you?  I am biased toward services rather than buying software, but you do need to consider the pros and cons in a balanced way:

The on-premise solution might be better if you want tight integration with the SAP or Oracle workflow, although the OmPrompt service can also filter invoices, claims, and POs based on your contracts and business rules.  The service-based solution removes the obligation to maintain server, operating system, licenses, users, and the core software;

Cost-wise you may pay much more upfront for the on-premise solution (license, installation, configuration, server, etc.) as well as 20-25% of the license cost each year for software maintenance.

The service option is very low-cost, after some setup fees, because you are using computing power that is shared across many clients.

Whichever option you choose, automating the manual work will bring clear returns:  reduced administrative work and solid internal controls to ensure you’re paying what you should on invoices and claims, plus the ability to standardize your inbound purchase orders or create a web portal for order capture.

Photo: Decisions Decisions; Andrew Stawarz, CC license

Companies making products sold at retail stores long ago realized they had minimal visibility of how their products are displayed at the retail shelf and how well their products ‘turned’ and produced revenue for them and the retailer. But today they can have visibility, and investments in software, services, analytics, or both are likely to produce good returns, if done correctly.

Where to get solutions? Retailers themselves will sometimes provide the data, but you may not have the infrastructure and tools to make sense of it in its raw form.  Third party data providers such as Nielsen and RSI, Orchestro, and Relational Solutions all provide the data in a much more usable form, accompanied by a whole range of reports and metrics.

The tools (software) and the POS and customer warehouse data are not expensive; you don’t need to build a colossal on-premise database and create a huge infrastructure to maintain it. Plenty of vendors have tools on a try-and-buy basis, and the data can be obtained on an a la carte basis (one retailer only, for example) from several different firms. Experimentation should be encouraged; there is no one right way to do this type of analytics.

The challenge, however, is what to do with the data and the findings gained, and how to engage your retail partners for the best collaboration? Start with your own products and determine metrics against which you want to measure retail performance, such as in-stock rates, % distribution in the store network, velocity, average days of supply in the warehouse, and any irregular peaks or valleys in inventory. You can also measure promotion and merchandising effectiveness.  These findings are the beginnings of the conversations you start to have with your retail customers.

From an IT standpoint, you need three things: 1) if you want the data on-premise, inside your firewall, you’ll need storage and ETL (Extract, Transform, Load) tools to load retailer and other transactional data; 2) a translation and user interface tool to build your analytics (many to choose from – see Tableau, Information Builders, Tibco, Microstrategy); and 3) some way to “govern” the data, which is how each data element will be defined and how it will be used in different analytical formats.

Keep in mind that setting up POS analytics is a means, not an end.  And that’s why experimentation is good — you want to find the best combination of data and analysis that yields the best results for you and your enterprise.  In this case experimenting is not expensive, so do lots of it.  What gets measured usually gets managed, and that is where the true opportunity is.

Image: visualization of data showing places in New York City frequented by tourists (red) and locals (blue); by Eric Fisher; Creative Commons license.

Another emerging segment of the analytics software market is data virtualization (DV), referred to by some as Information-as-a-Service (IaaS), which enables access to multiple data sources, usually in real time, without the time and expense of traditional data warehousing and data extraction methods.

Forrester Research defines DV as solutions that “provide a virtualized data services layer that integrates data from heterogeneous data sources and content in real-time, near-real-time or batch as needed to support a wide range of applications and processes.”  Data Visualization, on the other hand, refers to methods of displaying data in a highly visual way, with the purpose of finding a display mechanism that reveals more insight than traditional reporting methods (see ‘What is Data Visualization’?)

Traditional BI or analytics methods rely on some form of data warehousing, in which pieces of data are extracted, usually from transaction systems, transformed or “normalized” (i.e., “formatted”), and stored in tables according to some type of schema. “Customer Account Number,” for example, may belong in the “Customer” table, and so on. As covered in the book, building a data warehouse and getting it to work right can take years, and require substantial technical skills that even many mid-sized to large companies just don’t have.

Data Virtualization aims to overcome this disadvantage by not extracting data from their original sources but by viewing and manipulating the data inside the DV tool or layer to build your analysis.  In simple terms, a DV tool is supposed to let you “see” sources of data in different applications and databases, and to “select” data from those sources for your queries or analysis.

While it’s feasible to connect directly to external applications and other data sources, whoever owns or manages that application or data source may prevent you from connecting directly, for security reasons, or to avoid overloading the database, to avoid corrupting the data, or simply because the data is proprietary and the provider allows access only through an environment external to the data source.  These are some of the barriers I have encountered.

Forrester estimates an $8 billion market for DV software.  Forrester notes that the current market is dominated by big companies such as SAP, Oracle, Informatica, Microsoft and Red Hat, and specialized firms like Composite Software, Denodo Technologies and Radiant Market.

Experimenting on a small scale is a good idea here.  Vendors are willing to show you capabilities and do small pilots to prove the concept you might be considering the software for.

Image: opensource.com

The term ‘adaptive software’ has at least two meanings: 1) software that is created with built-in capabilities to change its logic in the future; 2)  software that enhances an existing software application without significantly changing the underlying code of that application.

I have not seen real-world examples of 1) above, so I will focus on adaptive software as defined in 2) above.

The value of this type of adaptive software is in providing new functionality without the high cost of re-programming existing software applications.  Those existing applications are often referred to as “legacy” applications.  They could be five, 10, or 15 years old or older.  In some cases the company that wrote the program is no longer in business.  What do you do if you want to make changes to those applications?  In some cases adaptive software can be used.

Bob Kennedy, VP for business development at DMLogic LLC, describes in a recent article for supplychainbrain.com how adaptive software can be used to add features and functions to a warehouse management system (WMS).  He explained how companies used adaptive software with an existing WMS to create weight-check functionality and messaging and develop new screens to collect international shipping information.

I like the concept of adaptive software but a few hurdles have to be overcome, and you need to understand the limitations.

The main hurdle is access to the existing application’s database.  If you own the application and it resides on a server inside your enterprise this is probably not an issue.  But if you are part of a multi-company or multi-division enterprise all of whom depend on the application you want to adapt, you’ll need internal agreement on any changes (easier said than done!).

The limitations of adaptive software are …. not yet known, but I can guess they would start to be apparent when you try to change something very fundamental to the logic of the application.  Example?  Trying to use adaptive software to add a new unit of measure called “truck” to an existing WMS wherein you have only defined valid units of measure as “case” or “pallet.”

Having tried to find holes in the concept, I will say again I like the idea, because I think software vendors have intentionally or not created products that are too difficult and expensive to change.

Big ERP systems are a good example.  These systems are built with the back office in mind, they are workhorses and can scale as big as you want, but they are inflexible systems and they require disciplined data entry into the right screens at the right time with pristine data.

Can adaptive software solutions meet this challenge?  Can they provide a user interface for complex and heavy ERP systems that simplifies keystrokes and everyday transactions?  I think so, because we have already seen that mobile and tablet applications can simplify what are basically multi-step transactions.

Read Bob Kennedy’s article here.

Another kind of Saas: The village of Saas-Fee and surrounding mountains, in southwestern Switzerland. Photo by Robbie Shade, CC license.

Everyone has a SaaS version of the software your business is considering, right?  Vendors know that terminology like SaaS and cloud trigger generally positive reactions from potential customers — having these options implies the vendor is up to date with the latest advances in software platforms.

Never mind what the vendor calls it.  What you need to understand right from the beginning is: who owns the software, where is it hosted, and how is it priced?

1. True SaaS is software that you do not own and do not maintain.  Some vendors will promise to maintain their software and to support your users, but the application nonetheless is installed on one of your servers.  This is not true SaaS.
2. An application that is customized just for your business, hosted by the software vendor, and whose costs are just spread out over a period of years via monthly payments, is not true SaaS.
3. True SaaS is priced like a subscription, one that is, say, monthly, and that you can cancel at any time.
4. True SaaS will have little or no startup costs.
5. A SaaS application can be what is called “single-tenant” or “multi-tenant.”  The former means you are using an application that is configured just for your enterprise; the latter means you are using the same base code or a copy of the same base code that many other firms are also using.  The former will cost more.

Why would companies say their software is SaaS when it really isn’t?  Because the term SaaS has a halo effect — it implies the solution is advanced, quickly implemented, efficient, and inexpensive.  A vendor can even make the pricing look like Software-as-a-Service (#2 above).

Know the details before you waste too much time.

Related: A Software Vendor Checklist

Image by JDA, Inc.

Flowcasting is the estimation of future demand using data about the flow of products through your supply chain, to your customer and through their network to the shelf and checkout.  Ostensibly, flowcasting gives you a fresher picture of demand than traditional forecasting, which mostly uses historical demand patterns and demand spike estimates for upcoming marketing and promotional events.

Flowcasting requires accurate data from several points in the supply chain (yours and that of your trading partners), from the shelf backwards. The data has to be summarized in the same time sequencing as your physical supply chain in order to see cause-effect relationships, and it has to be “normalized” so that data points collected from your customer’s system have the same nomenclature as those in your systems.

As you might suspect, choreographing the successful flowcasting system is no small effort.

Nonetheless, software vendors are beginning to market “flowcasting” solutions.  This description from JDA for its product is a good summary of what flowcasting applications are at least intended to do:

“JDA Flowcasting enables channel-wide joint planning and collaboration between manufacturer and retailer based on sell-through forecast, promotions and supply chain planning parameters. This solution delivers visibility and enables analytics directly from the shelf, tying in replenishment and time-phased order collaboration with key trading partner participants. Enhanced collaborative planning drives improved profitability, productivity and control.”

In simple terms, software for flowcasting tees up all the downstream analytics from your supply chain and integrates it with your supply chain planning systems for smarter sourcing, production, and distribution decisions.

Should you invest in these applications?  I think some firms will see more benefits than others:

• Firms that have strong collaborative selling plans with their trading partners stand to benefit from the “one version of the truth” that can come from both retailer and suppliers being on the same flowcasting platform;
• Companies with fast-moving supply chains and relatively short production and delivery lead times may gain benefits from the ability to act on the near-real time consumption data.  For example, production plans and inventory settings for new products can be adjusted for items that are selling through the supply chain faster than predicted;
• Organizations that have more experience with supply chain planning applications and more expertise internally with data-driven supply chain management will have a shorter learning curve with flowcasting.
• IT departments that have full control over their ERP or other systems of record and can competently integrate supply chain planning applications will also benefit sooner and at less expense.  It is from within an enterprise’s ERP system that, among other sources of data, successful flowcasting will need to extract and use accurate inventory, on-hand order, and pricing data including scheduled promotional discounts.

Consultants Andre Martin and Mike Doherty have written a book about flowcasting.

The Landmark Shopping Mall in Hong Kong.  Photo by See-ming Lee, CC license.

It’s now possible to string together data points collected from the shelf (POS) and upstream from there (your supply chain) to optimize your sourcing, production and distribution decisions.  Application vendors are calling this Demand Signal Management (DSM).  It’s not new; the same concept a few years ago was called shelf-driven demand management.

Is this something you should invest in?

My experience is that these tools used even on a small scale are insightful and provide real returns, but that it’s easy to over-invest and get lost in what you’re trying to do with the mountains of data now available.

The vendor landscape is predictably unclear.  Before you consider vendors, though, it’s helpful to understand the different segments within DSM:

• Shelf or Point-of-Sale data is just one component and by itself in its raw form it’s not very useful without formatting and organizing it and normalizing it to your definitions. This is where POS data providers add value.  Many retailers will only supply data for your products, not selected competing products or your product category as a whole. This to me is a big gap in understanding true demand.  From POS data one can calculate product performance indicators such as days of supply, out of stocks, and item velocity.
• Customer warehouse data is one step upstream and is usually available from most retailers and included in the data package offered by POS vendors.  This data shows the quantities into and out of the warehouse, quantities on order, and current inventory. Again, usually only data for your products.
• Upstream from the warehouse is your enterprise and any data you might want to incorporate into the analysis: forecast, orders, inventory, past or planned promotions, production plans, supplier orders, marketing events, advertising, etc.
• Then there’s everything else: environmental data such as market size and segment trend data, geographic/demographic data, social media, the weather, the time of year, and cultural trends.

Putting all these pieces together for a coherent and insightful view of your demand is the promise of DSM.

Application vendors in this area fall into two main categories: 1) “point” applications that offer one solution for one part of the supply chain, such as POS data vendors; and 2) fuller end-to-solutions that offer the ability to incorporate many different data points from many parts of the enterprise and to relate them in a logical way to one another.  My advice:

1. Try a point solution approach on a particularly difficult or troublesome part of your supply chain; it’s not expensive and many application vendors can enable a solution quickly on a cloud platform;
2. Keep the financial commitment small and the option to exit from the solution easy.  This should not be difficult, as vendors often will agree to month-to-month contracts;
3. Do steps 1) and 2) before launching any large end-to-end DSM initiative.  An end-to-end project can involve lots of data management (conversion, translation, normalization) and if its not done right the result could be a confusing and unreliable addition to your demand planning efforts.

Talk about disruption!  An anti-Uber taxi protest in London, June 11, 2014.  Photo by David Holt, CC license.

Does anyone think Uber would exist without mobile computing?

You might think of mobile as providing convenience, which it does, but there are deeper and more significant advantages of having mobile as an asset in parts of your business.

The most lucrative uses of mobile are in the selling channels.

Mobile versions of online ordering sites.  This capability increases the surface area of your selling space; the consumer is exposed a higher percentage of time to your products and services and the opportunity to buy them.

Being able to find your web site on a smartphone is not the same thing; at the very least your site has to be “responsive,” so that the online version scales down in proportion to a mobile device.  Otherwise your site looks terrible on a smartphone and is nearly impossible to use.  For more effective results, have a mobile app built and connected to your back office systems.  Vendors in this area range from thousands of independent programmers to companies who build mobile apps and network them to your systems, such as Mashery, Sourcebits, and DMI, and full-service B2C providers such as CapGemini, Infor, Accenture, and Deloitte.

Close-the-sale documents in mobile form.  When buyers decide to buy can be uncertain; a sales call can be a propitious moment.  Waiting for the necessary forms and signatures risks losing the sale in the interim.  Document-signing has moved to electronic form (DocuSign, eSignLive, and ElectronicSignature.com), opening opportunities to conclude in mobile form all kinds of commercial transactions.

Sales rep access to company sales order and other systems, for order placement, product demonstration, or sharing of data and insights.  In-store stock replenishment has been done for many years by companies that distribute directly to retail stores via route drivers. But these systems were/are usually expensive and custom-built, with very narrow single-purpose capabilities.  The smartphone and its digital network changed all of that.  Don’t under-estimate the value of sales people with tablets who can share upcoming marketing plans and data confirming promotional lifts in sales from prior events.  For more on this, peruse this link, which discusses a wide range of mobile applications for use in sales.

Point-of-delivery generation of invoice, credit, and debit transactions.  In many businesses, point-of-delivery processes are extremely inefficient.  Delivery discrepancies are hand-written on paper copies of receiving documents, which are then sent to offices where the data is entered into a system.  The delivery data flows back to the shipper, and is investigated by back office people.  Inventory and customer accounts are adjusted for the discrepancies.  The customer’s payment — which differs from the invoice — is received, and short-pay amounts are assigned to special accounts.  Good automated point-of-delivery solutions can usually be found from transportation or logistics management software providers, such as JDA, LeanLogistics, Logility, Infor, or TecSys.

For more on mobile app usage, check these out:

The Mobile App Development Playbook for 2015, Forrester Research

7 Ways Mobile Apps Are Driving Revenue for Businesses

How Businesses Are Using Mobile Apps – 2015 Canvas Survey Results

The social network is (one of) your sales channels.  Map of Facebook connections; by Michael Coghlan, CC license

“Omnichannel” commerce describes the (new) reality of being able (are you able?) to sell and deliver your goods and services to anyone, anywhere, at any time.  Not just sell, but carry the selling experience to the consumer in your own unique way.  Selling your goods through Amazon is not selling in a true B2C sense, because you don’t control the buying environment and buying experience; your stuff is on their site just like everyone else’s; all you have to do is ship the order.

And not just deliver, but completely fulfill your customer’s order in a virtual and physical sense, including returns, adjustments, credits, coupon discounts, and loyalty discounts, stuff that your current systems are probably unprepared to manage.

Consider an example:  You are a name brand manufacturer of sporting goods.  Before “omnichannel,” you sold through distributors to sporting goods retailers or directly to big box discount outlets or department stores. Your go-to-market path and the systems you needed were relatively simple.

Now, in an omnichannel world, your customers want to buy your products on Amazon, e-Bay or any number of sites, or directly from your web site delivered by Fedex, directly from you delivered to your local department store, or from inside the store but delivered to your home.  They want to use an online coupon in the store or a store coupon to buy online. They want to return everything at no cost and with no hassle.

The main point: your customers still want your goods, but the mechanics of selling to them and satisfying them have changed dramatically, requiring a whole new set of enterprise software tools.  Author and adviser Geoffrey Moore calls these tools systems of engagement, and clearly distinguishes them from the traditional systems of record most enterprises are used to.  In omnichannel, you need both, and engagement systems must work hand in hand with systems of record.

This is the value (some) e-commerce firms provide.  One of them is SPS Commerce, a small but successful company based in Minneapolis.  Other traditional EDI providers like GXS/OpenText, IBM Sterling, and SAP/Crossgate are also competing in this space, and the race to “own” omnichannel is on.

My advice:

• Your legacy ERP systems won’t get you there; you need commerce-capable systems of engagement;
• There is a lot of hype around omnichannel and therefore many vendors claiming they have the best solutions; look for years of experience in multi-channel fulfillment;
• Pick a small pilot project with narrow scope; get e-commerce vendors to let you try-and-buy;
• For a larger project such as outsourcing B2C, use a structured RFP process and compare vendors in an apples-to-apples way;
• Straight-on EDI services have become a commodity, so look for vendors that can give you other omnichannel capabilities such POS analytics and data integration, digital product and image catalogs, or configurable B2C sales platforms; or e-commerce vendors who already have a large percentage of your customers and suppliers already in their network.